When the recent stock market calm turned into a storm, investors started looking for someone to hold responsible. Some analysts and investors have blamed the VIX Index, a measure of the stock market's expectations of near-term volatility published by the Chicago Board Options Exchange, for increasing the recent fluctuation in the stock market. The VIX Index is used as a reference point for futures and options products by fund managers. As stocks have steadily ticked up until the recent sell-off, the VIX Index reflected the expectation that the steady rise in stock prices was to continue, which encouraged investors to bet on smooth sailing ahead.

George Pearkes, macro strategist at Bespoke Investment Group, joined us to talk about the role of the VIX Index in the recent stock market volatility. Below is an edited transcript.

George Pearkes: I don’t think it’s justified to blame the CBOE’s VIX Index, which has been around since the early 1990s in various forms, and is widely tracked across the financial universe. I mean, the VIX Index is just a calculation of options prices. So it’s hard to get mad at that specific index itself. Now, getting a little bit frustrated with people that developed investment strategies based on this index and based on futures related to that index is maybe a little bit more reasonable. I still would have somewhat of a disagreement with that, but I can understand it a little bit better.

David Brancaccio: Because there are products built on the VIX Index — the way there are financial products built on the S&P 500 or really any other index — that trade on this. And some of those strategies went horrendously wrong in the last four days.

Pearkes: Exactly. You cannot go out and buy the VIX Index — that does not exist. What you can do is buy futures that are related to the VIX Index. These futures were also available for purchase via what are called exchange-traded notes. They’re similar to exchange-traded funds, but they’re a debt instrument. Individual investors, and a large number of institutional investors, were involved in these notes which, in some cases, reached assets values of as high as $3.5 billion. The VIX spiked, the futures prices spiked, and the products that were short these futures lost a ton of value. And as a result, some investors are feeling a lot of pain if they didn’t manage the risk associated with these products correctly.

Brancaccio: The broad theme until five days ago was not much volatility in financial markets. Trees grow to the sky, the stock market is going to continue going up. The broad lesson is suddenly things can change.

Pearkes: And it’s a good reminder to people that they can only take so much risk. One of the classic things we’ve seen over the past few years is that every once in a while, risk will pop up somewhere whether it’s China’s currency, whether it’s oil markets, whether it’s high yield. And the markets are reminded that they can only sort of get so far so fast. And ultimately, that’s been a healthy thing. As we’ve seen repeatedly, these sharp reminders haven’t led to a larger, more painful crisis, as they might have in a different era where risk wasn’t so carefully managed by Wall Street and by regulators as well.

David Brancaccio is the host and senior editor of Marketplace Morning Report. Airing five times each morning, his reporting focuses on the future of the economy, financial and labor markets, technology, the environment and social enterprises.